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7/31/2019 Legal Aspects of Tax and Business -- CENTRAL EXCISE
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An excise or excise tax (sometimes called a duty of
excise or a special tax) is commonly understood torefer to an inland tax on the sale, or production for
sale, of specific goods; or, more narrowly, as a tax on
a good produced for sale, or sold, within a country.
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In India, an excise is described as an
indirect tax levied and collected on the
goods manufactured in India.
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In many countries, excise duty is applied by the affixation of
revenue stamps to the products being sold. In the case of
tobacco or alcohol, for example, the producer buys a certain
bulk amount of excise stamps from the government and is then
obliged to affix one to every packet of cigarettes.
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Critics of excise tax have interpreted and described excise
duty as simply a government's way of levying further and
unnecessary taxation on the population. The presence of
"refunds of duty" under the UK's list of excisable activities has
been used to support this argument, as it results in taxation
being implemented on persons even where they would
normally be exempt from paying other types of taxes
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Specific duty-This Duty is payable on the basis of
certain unit like volume, weight, length etc.
Eg. Duty on cigarette is paid on the basis of length ofcigarette
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Tariff Value-tariff value is fixed by the government.
Government can fix different tariff values for different classes
of goods or goods manufactured by different classes or sold todifferent classes of buyer
Value based on maximum retail price-Central Excise Act
empowers the Central Government to specify goods on whichduty will be payable based on retail sale price
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Following types of control have been proscribed for the levyand collection of Central Excise duties: -
PHYSICAL CONTROL
Under the physical control system the manufactured goods are
removed form the place of manufacture under the supervision
of the Central Excise officers on after the assessment and
payment of appropriate Central Excise duty
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Under the Self-Removal Procedure (SRP) the goods areremoved on payment of duty and against invoices
signed by the assess.
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Packaging charges-Cost of packaging will be covered
in connection with or in respect of sales.
Design and Engineering charges-Essential for the
purpose of manufacture.
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Consultancy Charges relating to manufacturing
Pre-delivery inspection charges for vehicles-The
vehicles sold to the dealers, conduct pre-delivery
inspection
Loading and handling charges within the factory-
Royalty charged in franchise agreement.
eg: Pepsi and Coca-Cola.
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Price escalation clause-Additional price is payable if
there is an escalation in prices.
Additional consideration should be added to the price
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Deduction of Taxes from Assessable Value:
Taxes payable on finished product are to be excluded for the
purpose of evaluation.
Trade Discount:
Trade discount are allowed as deduction for valuationpurposes. Trade discount given to the buyer is not commission.
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The Goods are not sold at the time of Removal:
This rule applies in case of removal of free samples or supply
under warranty claims.
In Case of Goods Sold at Different Places:
Actual cost of transportation from place of removal up to place
of delivery of the excisable goods will be allowable as deduction.
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Valuation in Case of job Work:
Valuation can be done on the basis of job charges plus material
cost without considering traders profit.
Sale at Depot/Consignment Agent:
Price prevailing at depot shall be the basis of Assessable Value.
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Goods Sold Solely through Related Person
Best Judgment Assessment
If assessment is not possible under any of the foregoing rules,
assesment will be done by best judgement
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Every person who produces or manufactures excisable goods,
it requires to get registered, unless exempted [Rule 9 of central
excise(No. 2) Rules, 2001]
Manufactures is required to maintain daily stock accounts of
goods manufactured, cleared and stock [Rule 10 of central
excise(No. 2) Rules, 2001]
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Goods must be cleared under Invoice of assessee, duly
authenticating by the owner or his authorized agent. In case of
cigarettes, invoice should be countersigned by Excise officer,[Rule 11 of central excise(No. 2) Rules, 2001]
Duty is payable on fortnightly basis through challan / cenvatcredit. [quarterly in case of SSI].
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Manufactures of matches have to pay duty by affixing central
excise stamps. [[Rule 13 & 14 of central excise(No. 2) Rules,
2001].
Cenvat records and return to be submitted by 5th of the
following month [Cenvat credit rules,2001]
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Monthly returns in form ER-1 should be filled by 10th of
following month (SSI unit to file quarterly return) [Rule 17(3)
of central excise(No. 2) Rules, 2001]
Every assessee is required to submit a list in duplicate of
records maintained in respect of transactions of receipt,
purchase, sales or delivery of goods including inputs and
capital goods [Rule 22(2)]
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If products of manufacturer are completely and
unconditionally exempt from duty is required to file
declaration in prescribed form to central excise authorities
Some goods are exempted on basis of value of clearances.
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If duty on ready made garments is paid by raw material
supplier.
If whole production is exported
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Goods in store room are liable for duty
Remission of duty can be given by the Commissioner if the
goods are destroyed by natural causes.
Proof has to be provided
If goods are not entered in Daily Stock Account question ofremission of duty does not arise.
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